Coaches should be paid on performance—on client acquisition and retention—for the lifetime of each client.
The best way to ensure long-term success for both the client and the coach is to have each invested in the other. The client is invested in ongoing guidance from their coach, while the coach is financially invested in keeping that client around.
The relationship and trust that develops between a coach and their client is integral to both retention and referrals. The coach earns more on clients who are referred to them—either from their current clients, or their professional reputation.
This ensures that coaches are able to generate higher income for themselves by generating revenue for the business.
In this equation, the client wins by bringing in their circle of influence into your facility. They share the experience, the wellness, the accountability, the community, the vitality and the longevity that comes along with it. But they also get to have a buddy in your community. If they're new, this is a major win as now they don't need to make all new friends on their own.
In this sense, performance-based pay ensures the coach will perform like an entrepreneur, as opposed to just showing up to coach the class, as their livelihood depends on how well they attract, service and retain their clients.
In practice: A coach with 50 clients each paying $250 a month has the ability to earn $5,625 (an associate coach earns an average of 45% off each client) a month off their recurring book of clients (and the opportunity to earn more by adding clients into fundamentals, as well as any other specialty programs they might run).
Note: Top Madlab coaches earn six figures in this compensation model working a sustainable number of on-floor hours each week.